French presidential debate lifts euro to six week highs

﻿The euro climbed to six-week highs and French bonds and stocks rallied on Tuesday after centrist Emmanuel Macron's performance in a television debate raised expectations he would win France's presidential election over the far-right's Marine Le Pen. The dollar was also held back by doubts about how fast U.S. interest rate would rise. Oil prices rallied almost 1 percent on talk that OPEC could extend supply cuts. European stock markets opened higher . FTEU3, after a rally in Asia, where MSCI's broadest index of Asia-Pacific shares outside Japan . MIAPJ0000PUS hit 21-month highs, supported by signs of strong global economic growth. U.S. stock futures ESc1 1YMc1 pointed to a positive start for Wall Street, which had suffered on Monday as investors worried that President Donald Trump's plan to cut taxes and boost the economy would take longer than expected to realize. France's turbulent presidential campaign remained in focus for global investors, who have been concerned about the potential for a populist backlash following last year's surprise votes for Brexit in Britain and for Trump in the United States. A snap opinion poll that followed Monday's televised debate showed Macron, a former economy minister who has never run for public office before, was seen as the most convincing among the top five contenders in a marathon debate. The debate, and two others that will follow before the April 23 first round, are considered crucial in an election in which nearly 40 percent of voters say they are not sure who to back."From the point of view of international investors, this is a positive as it keeps France's position in the euro zone secure, or at least not weaker," said DZ Bank analyst Rene Albrecht. Macron's presidential bid gathered pace on Tuesday after a junior minister said she would back his campaign, becoming the first member of the government to do so.

The prospect of anti-euro, far-right candidate delivering a surprise election win has rattled French bond markets this year. But on Tuesday, the premium investors demand for holding French 10-year government bonds over German ones FR10YT=TWEB DE10YT=TWEB narrowed to around 63 basis points from Monday's 68 bps, a near-two-week high. Safe-haven German Bunds sold off as French election jitters ebbed. French banks such as BNP Paribas (BNPP. PA) and Societe Generale (SOGN. PA) -- bellwethers of sentiment in France -- were among the top gainers on France's benchmark stock index . FCHI. The euro rallied to $1.0804 EUR=, its highest in about six weeks and was 0.3 percent firmer against sterling EURGBP=.

"The euro has been helped by Macron's performance, definitely," said Stephen Gallo, head of European FX strategy at Bank of Montreal in London. The British currency was boosted by stronger-than-expected inflation numbers that took the rate of prices past the Bank of England's 2 percent target. DOLLAR TUMBLE The dollar index fell below 100 . DXY for the first time since early February and was down almost half a percent on the day. The currency was on the defensive after Chicago Federal Reserve President Charles Evans reinforced the perception that the U.S. central bank will not accelerate the pace of its interest rate hikes.

He said on Monday that two more interest rate hikes this year were likely, disappointing investors who had anticipated rates would be increased more quickly. The 10-year U.S. Treasury yield US10YT=RR briefly fell to two-week lows following the comments to 2.461 percent. It last stood at 2.48 percent. Oil prices rallied on expectations that an OPEC-led production cut to prop up the market could be extended. Prices for front-month Brent crude futures LCOc1, the international benchmark for oil, gained 1 percent to $52.13 per barrel. OPEC members increasingly favor extending the output curb beyond June to balance the market, sources within the group said, although they added this would require non-OPEC members such as Russia to also step up their efforts. Elsewhere, Deutsche Bank